Tax deductions for research and development may represent one of the major items reducing the tax base so companies can save considerable amounts on taxes through investments in research and development.The legitimacy of claiming tax deductions for research and development within companies' tax returns has been assessed by tax administrators until now. Based on the information available to them, tax administrators had to decide whether the companies actually carried out research and development in such cases and thus whether entitlement to use such tax deductions arose.
The judgment of the Supreme Administrative Court (SAC) Ref. No. 10 Afs 24/2014-119 has significantly changed the existing procedure of tax administrators, because the SAC concluded that tax administrators in most cases do not have appropriate technical knowledge that would enable them to properly assess the often highly technical evidence based on which the entitlement to the claimed deductions should be assessed. For these purposes, the SAC recommends that an independent expert be appointed who will be able to provide an adequate opinion in the case in question.
